Walmart is down on earnings and well dig through that report and talk about the Amazon Effect and shares on alibaba spiking on earnings first up though, the watch is on to see what effect this could have on the trump agenda a few of the quotes jamie dimon i strongly agree with the president s statements must speak against ideas that divide us. Im ashamed of our president s behavior what does this all mean for the agenda and the degree to which business was going to help push it no republican that ive seen has called ut trump by name the way some of these ceos have an theres a desire to get something done in tax reform but repeal and replace that budget are going to be ahead of that and i think that they themselves will be more attracted because of this. If you look at the calendar its probably not possible but it wouldnt have mattered either way because i dont think the ceos are able to influence congress and congress has its own agenda. The thinking was tax reform specifically was going to get a big push during the vesz areces with the help of the round table or others. I just think youre either in favor of the tax reform or youre not and the ceos want tax reform and their views are known. They have made their statements and i think that they, its really just the listics and the time frame and the time frame has gotten better bad. All right so its a mechanism. Its not whether things happen or they dont know, that didnt change but the timing may have changed. Yes we have to do tax reform everybody accepts it were going to talk to probably one of the ceos most impacted by tax reform in a few minutes. You may believe that tax reform is going to happen with rep repatriation the ceos outlined what they want they dont need to be outlining it over and over again. Obviously a huge story yesterday as companies try to workout this political calculus. Walmart is the other big story moving lower despite better than expected Second Quarter results. The dow components with a 12th straight quarterly increase in comps. They did raise the low end of the full year guidance but the Current Quarter guidance is below the midpoint and margin versus gotten some attention. Yes, mar jins got some attention but theyre shifting so rapidly so ecommerce, you have to put walmart on the plane of amazon. There could be some gross margin pleasu pressure if this stock were at 78 it would go to 80 but its at 80 so it goes to 78. Sometimes that period happens. Walmart is the beacon throughout this period. Coach just imploding and dicks the stock didnt do anything so it didnt go down with the group so when we finally see the number we get a little bit of a profit taking but this is not l brands which also reported this is against expectations. Thats interesting. Strongest grocery comp in five years. Thats what im worried about. Worried about groceries are under pressure throughout the country and they had a little inflation but youre going to talk about eggs and milk and eggs and milk and what i like and theyre going to be tough. Fastest grocery comp before the walmart acquisition is absorbed and they start drivi driving. I dont think that walmart would want any of its suppliers. You mentioned it before. When microsoft that partnered with scisco has a great data center alphabet they call every one of these supply yes, sir and say lets get on the phone with red hat and move it over i think amazon has an achilles heel. Your point is walmart has some leverage that maybe underappreciated. Walmart has more leverage than in many cases the government. Notice Doug Mcmillan when he comes out against or for anything now southwest airlindo i like as our people without paying a membership fee they are going after amazon like no one i have ever seen and mcmillan is a quite soft spoken fella but have to tell you if i were amazon i would say, these guys arent rolling over and playing dead and im going to call all of my customers for Amazon Web Services and say, you know, lets talk maybe lets talk means ill charge less. Thats interesting, by the way, a number of stores, locations at walmart now doing online. They have to keep that because theyre so close to every consumer remember they have a brick and mortar model that they can convert and thats gross margin pressure they convert to be able to be the depot then what you have is amazon buying a 400 store chain which is not that close to everybody and high prices maybe they can slash that versus walmart being a place where you can take things back it is easy to ship things back from amazon and sometimes i wonder howl people get it down and then ship it right back. Thats a rental organization with that scott paper towel blue tuxedo i wore but im watching this and thinking okay walmart and mcmillan is underestimated why . Because he does not carry himself as if he is a goliath. He comes out as a david. Sort of the antielon. Totally thats a good one. He actually recognized it but mcmillan actually thinks im a person. Yes, when we come back theres a lot to talk about with Chuck Robbins including earnings and of course how American Business is dealing with the white house right now. Take a look at the premarket as we look at some weakness on the back of cisco and walmart. A lot more after a break times up, insufficient were on prenatal care. Es. And administrative paperwork. Your days of drowning people are numbered. Same goes for you, budget overruns. And rising costs, wipe that smile off your face. Were coming for you, too. For those who wont rest until the world is healthier, neither will we. Optum. How well gets done. Tmobile announces zero down for all. Now, get the whole family the hottest smartphone brands like Samsung Galaxy for zero down. Plus, get 4 unlimited lines for 40 bucks a month, taxes and fees included. More reasons why tmobile is americas best unlimited network. For years, centurylink has been promising fast internet to small businesses. But for many businesses, its out of reach. Why promise something you cant deliver . Comcast business is different. We deliver superfast internet with speeds of 250 megabits per second across our entire network, to more companies, in more locations, than centurylink. We do business where you do business. One of the reasons why the averages look heavy is because of sis ccisco and companies are falling this morning a lot of people expected Something Better perhaps this is a first on cnbc interview with Chuck Robbins how are you doing . Thank you for having me. Good to have you, sir you are clearly executing on your strategy. Gross margins are great. Youre obviously getting to where you have to go but a lot of people would say listen i need something that gets there faster what do we tell people other than the 3. 75 yield and the possibility of repatriation. Its a terrific change in Business Model. Theres two key things out of this that i think are important. Number one when i became ceo two years ago i said were going to increase the pace of innovation particularly in our Core Technologies and what you saw in june was this beginning of a cycle of innovation that were going to bring forward when we launch this new era of networking that was incredibly well received by the analysts and our customers, our partners, our employees, theres an excitement about that and youll see that continue over the next few years and this was the beginning of that and the second piece is in this Business Model transition that we talked about as we shift more of our business to software and subscription we got some great metrics this quarter. Our deferred revenue grew 50 and now sitting at 5 billion and two quarters ago you and i sat in San Francisco and i said jim thats sitting at 4 billion so we have gone from 4 billion to 5 billion in two quarters and we also had the First Quarter where 1 billion of our product revenue came from recurring offers which is growing 40 year over year and during this transition we also had record eps, we had record cash flow so were executing really well and were also working on bringing these two together where this new networking platform that we bil built were going to integrate that which is something we have never seen before and we have seen early success with that as well. I agree 31 recurring revenue. Thats really monumental but then you go to the next page which is totally transparent and you see product categories, switching down 9 . Mgm rally down 9 . Data center down 4 kt. Service provider video down 10 . Wireless up 5 and security up 3 so all of those things are some what masked by the different categories dont you have to reorganize the way you report chuck because youre reporting in a way that doesnt show frankly the changes that youre making. Youre exactly right and we actually expected when we gave guidance last quarter some of the results we saw today obviously and the switching portfolio in particular. We knew we would be making the launch in mid june we knew wed pause and take a look at the newa architecture bu i think this quarter we began by showing more of the me tricks around our Software Business as a data point our Software Business today if you look at the size of it first of all, our Software Business and you look at where that would stack us up against Software Companies you would be surprised 51 of our overall Software Business, think about how it used to be an integrated software system. 51 this quarter came from subscriptions which is a huge shift so we are going to next quarter begin to change how we cat fworize and how we report our technologies what a week we had where ceos are having to deal with political questions in ways theyre not used to. You have some experience on this so far you havent been on these particular councils. What is being said among your peers . What advice do you give to your peers that are more directly affected did they do the right thing and how does the relationship change now . Well, first of all, everyone one of these ceos has to make a personal decision based on their company, their own conscience and what they believe and i think thats what all of them have done and i communicated with several of them as they have gone through this process but what happened this weekend its incomprehensible that were even having this conversation in 2016 as americans and as cisco we absolutely abhor racism, white supremacy. None of it is acceptable period. We need to drive job growth. We need to drive gdp growth. If you see the latest numbers you see areas around the world beginning to accelerate ahead of us which shouldnt be happening given where we are we need tax reform and those things that we have to focus on and just because of what has transpired over the last weeks we cant abdecate the need to get those things done and finally i think in my opinion this country needs to focus on the things that unite us and have united us from the beginning and made this country great and stop focussing every day on the things that we disagree on. Thats just my opinion about how we need to move forward. I share your opinion and you know that. Chuck, are you capable, meaning the business committee, not just you, of being a force now working with the president and i say that because you have 70. 5 billion in cash. Chuck i want to buy your stock if you can repatriate that money but does that make it so that its less like lie thly that th happen you said it earlier theres lots of ways to work with washington to get the right outcome for the American People and the Business Community which i think are very aline on this topic and working with congress that actually has to craft a bill and working with the house and senate and trying to get that done. Theres lots of ways for tous t still work with washington and i dont think regardless of the decisions that ceos made over the last few days i dont think anyone plans on abandoning the partnership that we need to have with the United States government on key issues related to policy that impact not only our companies but also the wellbeing of the country Going Forward. Now you have a huge federal business and i love the federal business you talk about how it could get better you talk about that. Have you ever concerned about being outspoken about what happened in washington could that hurt the shareholders im not speak negatively about the Administration Im just speaking about what needs to be done and our customers in the federal space we have Wonderful Partnership with them. We build Great Solutions to help them achieve their Mission Every day and were going to continue to do that as we talk about our federal business in q3 with a continuing resolution not being clear that it created challenges for us we saw later in our quarter in q4 after the budges became clearer we saw some improvement and now we have to get through the next 90 days and the next budget timetable but were very confident in our ability to bring value to the customers and they feel the same way. You used words like the u. S. Government, washington, you havent addressed the president by name. Does the relationship with the president change well, i think that, carl, look what happened over the weekend brought to a head an issue that the country needed uniting words. We needed words that were going to bring the country together around what happened this weekend. And i dont think we got those words. From him you mean thats what we need to focus on is how do we bring the country together now we focus too much on the things that divide us and its not going to serve us well on any point as we move forward. Chuck, i feel im doing disservice to the accomplishments that youre taking i think people dont understand. I want to point out how much of the transition do you think youre ahead versus say a year ago and would you ever think that you could be valued at say only 10 times 2020 earning ifs the transition occurs because of the deferred revenue we really see a different kind of number. You know jim if you look at our business, first of all if you go back a year ago and you look at how much progress we made we made a significant amount of transition in our collaboration business moving to cloud and our security business moving to software and subscription and even in our wireless business moving to cloud based management and now were beginning that journey into our Core Technologies we launched enterprise license agreements and software in the enterprise about 2. 5 years ago and we have 20,000 customers that bought those at this point. I think if you tried to value the company and you broke it down into components of how you would look at it i think that overtime goitits going to taker of itself and im really pleased with how the company embraced this transition is how the company embraced this shift to software and how much our customers and partners want us to move in this direction which makes it easier. I want to thank you for coming on. Chuck is the ceo of scisco and thank you for answering questions. I think we all recognize its part of the dialogue that has to be discussed. Thank you guys. Well get cramers mad dash as we countdown to the opening bell take another look at the premarket. Some red on your screen this morning. Opening bell in about 7 minutes. With at t you can get your entertainment right here. Right now, when you get the incredible iphone 7 from at t you can get unlimited data and live tv. The channels you love. Your favorite shows and movies. Making your iphone into more of a. Oh my tv is ringing. Hey. Im in the middle of a. A second iphone from at t . Okay right now when you buy a new iphone 7 from at t youll get a second iphone 7 on us. And power both with unlimited data and live tv. Adults are just kids with much, much better toys. The cclass sedan, coupe and cabriolet. The thrills keep getting better. Lease the c300 sedan for 399 a month at your local mercedesbenz dealer. Mercedesbenz. 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He talks to planes. He talks to planes. Watch this. Hey watson, whats avionics telling you . Maintenance records and performance data suggest replacing capacitor c4. Not bad. Whats with the coffee maker . Sorry. We are not on speaking terms. Time for cramer and mad dash. Amazon doesnt really care about the bottom line. Last year delivering alpha, interviewed the executive team and they told me that we can really grow at a level that no one has ever seen. Carl today they do 1. 17 revenue plus 58 , 466 Million People we forget that that Chinese Market we only have 317 million in our country so this was a remarkable quarter. Someone asked me on twitter why didnt you run this through your Charitable Trust and i answered because i was wrong. Youre always straight about it, jim. Well. It does bring to mind some of the interviews that steve bannon has given in the last 24 hours one of which he says the economic war to china to him is everything that unless the country does something china will wind up dominant in five years or so. Its a tough issue because have been, well before the presiden